Technology Pundits: "Bankruptcy looms for Sony"

[Red Cloak]

Analyst Rob Enderle seems to think so.

Sony hasn’t had a good year and things are about to get much worse. With litigation against the firm proliferating at an impressive pace and the danger of both astronomical penalties and criminal filings increasing it is becoming increasingly likely that we may be seeing the last days of this once great firm.
Howard Stringer was brought in early this year to turn things around. Since his arrival we've seen DRM rootkit lawsuits, a rumored PS3 delay and films like Stealth/Zorro/Zathura. Things aren't looking good to say the least.

Source: Technology Pundits (http://www.technologypundits.com/index.php?article_id=231)

EDIT: How much you want to bet Microsoft is ready to pounce? This rootkit is in effect a virus that has broken numerous copies of XP. California alone has tons of laws that are ineffect regaurding stuff like this. This is going to be big, the lawyers are going to have a field day.

[Last of the Red Hot Mamas]

I wish I could be an analyst and get paid to produce six short paragraphs of vague contentions followed by a couple dozen links.

[Murmillo]

Yes, Another Red Cloak Post!. Awsome Man!. You just made my weekend!!!!

Anyways. the analyst is half true. Sony hasn't had the best of years latly, but that doesn't mean count them out. Everybody has a bad period or two - everybody has been hurting.

[Steve_Erhardt]

The problem with movies like like Stealth/Zorro/Zathura is that everybody expects a mind-blowing, ego-wrestling, uber "Theah-TAH" picture along the lines of Schindler's List or Private Ryan anymore...

Sit the fuck down, suck your pop through the straw and munch your fucking popcorn and just enjoy the god damn fucking film. Not everything NEEDS to be Citizen Fucking Kane in stature.

Yes, bad day for me, but I'm getting sick of all the pissing and moaning about how movies aren't living up to what they should be anymore... YES, there are crap films a-plenty (see any Uwe Boll flick), but god fucking damn people, take a fucking break and enjoy a couple.

[Vermillion]

How is Zathura considered a failure before it has even had an opening weekend? It's actually getting good reviews.

[XenonCJ]

meh. Sony will be fine...

[Citizen Philip]

Thanks for my Friday delivery of FUD. Here's the $5.

"Ahh! Warm and steaming!"

[Speed_D]

Saying that a few lawsuits and blunders and crappy movies will put Sony out of business is ridiculous. Sorta like Microsoft shipping a few crappy games. These things are MINOR issues to corporations of that size. Microsoft's bread & butter revenue streams are Office and Windows. Sony's profit comes from either direct hardware revenue (TVs, etc) or indirect (Playstation sold at a loss to generate game revenue).

Stupid article.

[mos]

Um. I'm tired of watching shitty films, Steve. I'm not expecting every single movie to be "The Empire Strikes Back", but I'd like for a few more Episode IIIs and a few less Matrix Revolutions.

[Kelegacy]

Plotting...painful...demise...of....biased RedCloak...

*rips off the crimson cloak

....oh my fucking God.

[mos]

An unconfirmed quote states that half their income stems from the PlayStation line. If the PS3 doesn't just kick ass next spring, this guy might be right.

[DoubleUranium]

I can't fathom why anyone would want another Episode III. At least pick a good movie for an example.

[Red Cloak]

How is Zathura considered a failure before it has even had an opening weekend? It's actually getting good reviews.

It cost over 100 million to make, it is having an extimated 18 million dolar opening weekend. Not good. Will probably cap out at 50 mill, especially with Harry Potter on the way.

[crackeriah]

Not surprising to me. Sony started to slide in product quality years ago, and they are no longer the undisputed champ in any domain. Samsung and Apple have knocked them from their consumer electronics throne, and Microsoft and Nintendo together will give them serious competition in the next round of consoles.

[Kelegacy]

An unconfirmed quote states that half their income stems from the PlayStation line. If the PS3 doesn't just kick ass next spring, this guy might be right.

That's how anaylsts work. They MIGHT be right. Just like tomorrow I MIGHT sprout wings and fly. Or grow turn into a robot. Or invent the controlled black-hole iNTERtransHuB for transstellar space travel.

You have better luck playing the lottery than to bet on an analyst being right.

[sonysyndicate]

meh. Sony will be fine...

I agree Sony will be fine. If things go south though they can always cut American jobs.

[Dabombpizza]

Sit the fuck down, suck your pop through the straw and munch your fucking popcorn and just enjoy the god damn fucking film. Not everything NEEDS to be Citizen Fucking Kane in stature.

That is complete and total bullshit. No one is expecting Citizen Kane, but nobody wants this crap that is being rehashed. And there is no reason why I should want to sit through a shitty movie.

How much money goes into a movie? Millions and millions of dollars. A movie, and likewise, a game, that has so much money invested in it better be damn good, especially if the ticket or DVD costs as much as it does.

Also, there are thousands of people clamoring to make movies with extremely good scripts, and another thousand that are amazing directors, and on top of that actors are a dime a dozen.

Why don't good movies come out? Because producers attempt to cater to formulas. Look at Hitchhiker's Guide to the Galaxy for example. A perfectly good story was altered so that we could have a) Action and b) a love story and c) a happy ending, none of which existed in the book. Hollywood has exhausted this formula and no amount of explosions and titties are going to compensate for a shitty story and pathetic acting (Troy).

When millions of dollars are spent on a film then I think we very well can demand a good movie, or a good game. B-movies like Stealth should be rentals only, especially for $8+ a pop, and if you're hungry/thirsty throw another $5 on top of that (and if you have a family...well shit, you're fucked).

Sorry about the tangent, but I think the movies are in piss poor shape right now, and they keep blaming shit like HDTVs and DVD players for lower profits instead of saying, "Oh...well I guess our movies blow..."

And...uh...Sony isn't going bankrupt anytime soon IMO.

EDIT: There is waaaaay too little information presented in this article to even come near a conclusion as to Sony's future. Total speculation.

[Heretic Machine]

You guys have way more faith in Sony than you should... It's widely known through out the business world that Sony has been in financial trouble for quite some time. They are far too dependant on the Playstation line, mostly because it's one of their few successful ventures these days. They have become notorious for overpricing products and undercutting on quality, and they continually get theirselves in trouble.

I'm not saying that they are going to go bankrupt, but you may see them go into a serious hibernation if the PS3 flops.

[Dabombpizza]

I'm not saying that they are going to go bankrupt, but you may see them go into a serious hibernation if the PS3 flops.

I can totally see that, along the lines of Atari in 1981. Yea, they're around, but nothing like they used to be. But bankruptcy is way out of the question. Unless of course there is some questionable book keeping going on....hmmm....

[mister_slim]

Sony's not going anywhere. No matter how poorly they're doing, they're still a Japanese company.

[CrysDark]

I am hoping that if they do go Bankrupt or get close, they will wake up and realize, hey we have this household name-brand and were fuxing it up. A little shake up of the management, and BOOM! you have the Proud, effecient, and awsome company that it once was.

[Sensei-X]

I can totally see that, along the lines of Atari in 1981. Yea, they're around, but nothing like they used to be. But bankruptcy is way out of the question. Unless of course there is some questionable book keeping going on....hmmm....

Uh Atari is gone, dead, and buried. Has been for years, Infogrames bought the last remnants out and is using their name in place of their own because they think Atari is the more recognized brand. As for Sony, well people forget all those years where Sony has released practically no films that made a profit and they have simply waved their magic wand and the losses have gone away. Eventually stuff like that catches up to you. Will they go under? Probably not any time soon and not completely, I'm sure as we speak Bill Gates has a blank check with Sony's name on it, if worse comes to worse. Then of course there's Matsushita, I'm sure they wouldn't mind buying their smaller rival and rebranding everything to Panasonic.

[Vandenh]

Sony has made a lot of mistakes but I don't think it is that bad for them.

[The Iron Weasel]

This DRM shit, is just too far, we've been fucked by big companies before, but this takes the cake.

[ECM]

Howard Stringer was brought in early this year to turn things around. Since his arrival we've seen DRM rootkit lawsuits, a rumored PS3 delay and films like Stealth/Zorro/Zathura. Things aren't looking good to say the least.



In all fairness to Stringer, none of this is his fault--he just got there and all of the above was in the pipe long before he got the nod (I'm not a Sony fanboy, but cut the guy some slack as your wording seems to imply that this is somehow his fault).

[critch]

Zathura was FUCKING INCREDIBLE. If you don't like this, you don't deserve to have good movies come out.

I said the same thing about Serenity, and that failed. This is your last chance.

[bapenguin]

Looks downward to me. (http://finance.yahoo.com/q/bc?s=SNE&t=5y)

[bobbler]

Really, this thread is beyond stupid.

Any asshole knows that companies the size of Sony don't just go bankrupt over night. It'd take a few years of non profitable (no profits at all, not just slim profits) to bring down a company of their size. They have billions in assets; if a situation arises where they are in dire need of money they can sell off some factories, or fabs, or patents/ip, or movie studios, fincial section, etc, etc.

Can a mod actually, like, do their job and revoke Red Cloak's news posting abilities? Unless you actually think this type of news posting is acceptable, in which case Evil Avatar has sunk to new lows.

[Serapth]

On the subject of SONYs demise, talks are a bit premature, however, if the PS3 is a flop, Sony is going to hurt hard, especially if they are selling at a loss. Instead of just spitting out bullshit like so many people like to do, I took a look at sonys Q2 2005 financial report. Keep in mind, within the letter of the law, companies spin these things to look as nice to investors as possible, so you really have to read between the lines. Anyways, if you feel like verifying what I say, take a look at it for yourself. http://www.sony.net/SonyInfo/IR/financial/fr/05q2_sony.pdf

Point blank, shit dont look so Rosy for sony.

1) The gaming division made jackshit for being the companies bread winner as of late. With a profit of 73 million USD. ( I know that sounds big, but compared to some of their loses and gains, its nothing.
2) BMG, Sony-Erricson and MGM all lost money ( but not tons, all < 100 million)
3) Sony Financial ( good, who knew this existed... apparantly Sony sells insurance... ) mad a cubic assload of money apparantly. A net gain of 354 mil. Guess Japans insurance is just a crooked as ours :)
4) Sony Electronics reported a net gain of 153 mil USD... with a HUGE but. Ill get to that in a bit.
5) Sony Pictures (movies) lost 59 mil. Oh, and they blame Stealth :D
6) BMG lost 29 mil
7) Cashflow went from 5.2 BIL to 4.6B since start of 2005.
8) revinue growth by region since start of year. Japan -.4%, US -2.4%, Europe -4.8%, Othar +1.2%
9) Finally, from sonys own wording, they expect to lose about 20 billion yen in 2006.

Now, time for the but. All, and pretty much I do mean ALL of their numbers are padded by the sale of their pension fund to the Japanese Government. They are very upfront about it. It represents 560 mil USD in profit against all divisions. You take that out of the loop, and sony had one SHITTASTIC year. In the toon of a 400 - 500 million dollar loss, with predictions of another 200 billion yen loss next year. All told, not good. Plus, a company selling off pension funds is never a good sign.

So, basically, sony is sitting on about 4.6 billion dollars right now, and is burning it at about 1/2 bil a year. If the PS3 is launched at a major loss, this burn rate could go way up ( figure a 100$ per unit subsidy on the PS3 and shipping 10mil units before you can get that number down, costs you a billion dollars a year)

So, frankly, yeah. Sony is vulnerable, and the PS3 has cost them an assload to develop ( > 2 bil ), and if rumours are right they are selling it at a loss. All told, sony could go bankrupt very easily within a few years.

Ironically, sony could bankrupt itself if the PS3 is too successful. If they sell to many units at a loss, they may go broke before they have a few years to ride the gains back up. Then again, im sure they would control this through the supply chain.

EDIT: One thing I forgot to mention, but it impacts all of sonys numbers for the positive is Yen valuation. With the US dollar tanking, strong foreign currencies all ride an upswing ( Yen, CDN $, GBP, Euro ). Sony operating in Yen, but selling in USD is a huge boost to them ( and part of the reason for huge gains by Sony Financial ). If the USD comes on strong, it will hurt Sony more, but if it continues to fall ( god I hope it stops soon... ), it will be a boon for sony. This is true of all non US companies that sell to the states.

[Dabombpizza]

I said the same thing about Serenity, and that failed. This is your last chance.

Serenity was da bomb, but you really needed to see all of Firefly to "get" it.

As for Sony, well people forget all those years where Sony has released practically no films that made a profit and they have simply waved their magic wand and the losses have gone away.

All those class action law suits from around the world kind of change the whole formula.

EDIT: Awesome work Serapth.

[Zanzibar]

Good work Serapth.

PS3 will not fail. Unless they sell the fuckin' thing at $600 a unit, it's gonna win this console round again, albeit by a MUCH slimmer margin - probably by maybe 10% more than the X360.

[HarverdGrad]

Yes, Another Red Cloak Post!. Awsome Man!. You just made my weekend!!!!
Nice Try Red Cloak.
..you aren't fooling anyone.

[Serapth]

Nice Try Red Cloak.
..you aren't fooling anyone.

Red Cloaks bias aside, it is a legit post. Look at the PS3 as sonys last chance at the roulette table where they bet the house on black and are about to spin the wheel. (Ironically, ive done this twice in my life and won... well, not the house but all the money i had left at the casino. Like wesley snipes (or was it will smith? ) said... ALways bet on black! :D (to those wonder... im a WASP, no racial undertones here)

Edit: Corrected phonetic typing. Shit, having a few beers, reading sonys financial statements and posting in an online message forum just dont mix.

[Dabombpizza]

PS3 will not fail. Unless they sell the fuckin' thing at $600 a unit, it's gonna win this console round again, albeit by a MUCH slimmer margin - probably by maybe 10% more than the X360.

There is no evidence that this will happen. What motivation do you have to buy a PS3? Games? Oh...there are none there currently. Online convergence into your living room? Nope, that's the 360. Radical new approach at gaming? Nintendo drew that straw. What exactly will be good about the PS3 besides a rumored 2x floating point processing power over the 360 which cannot be confirmed because we haven't seen the damn thing in action? Guess we'll find out in E3 :D

[Leaving Hope]

Japanese buyers are incredibly loyal to Japanese companies; so while Sony may be losing American customers at a high rate, they probably still retain a solid Japanese following.

Also, many companies have come back from hard times. It often requires a major restructuring, but it can be done.

The above said, I am not a major fan of Sony at all. I've had too many of their projects fail, I think their customer support is terrible, and I've lost faith in them.

But I don't wish bankruptcy on them. That's bad for economies, their employees, and the consumer.

[DoubleUranium]

I'd love Sony to go bankrupt to the point of having to split it up. Having content & consumer electronics under the same tent has been a nightmare for the company and for the consumers.

[Leaving Hope]

Awesome post, Serapth. Thanks for that.

[Serapth]

Japanese buyers are incredibly loyal to Japanese companies; so while Sony may be losing American customers at a high rate, they probably still retain a solid Japanese following.

Also, many companies have come back from hard times. It often requires a major restructuring, but it can be done.

The above said, I am not a major fan of Sony at all. I've had too many of their projects fail, I think their customer support is terrible, and I've lost faith in them.

But I don't wish bankruptcy on them. That's bad for economies, their employees, and the consumer.

I walk a fine line here. Im not a big sony fan even though I own a PS2 and PSP. As it stands now Ive seen nothing to make me want to buy a PS3(I will be buying an XBox360 and im taking a wait and see attitude toward the Rev but hell, if its 200$ at launch Ill pick on up just because...)

That said, I dont want sony to go bankrupt, but I would love to see them get a nose bleed. I liked the pre-hype sony of PS1 fame, I hate the uber hyped PS2 generation of sony. I owned a dreamcast when sony hyped the shit out of the PS2 prelease, and watched the dreamcasts sales dry up because of hype. To this day im still not convinced that the PS2 is ANY more powerful then the DC was. Then I hated the way they launched the PSP and bashed the shit out of the GC ( even though I bought one... which btw, I regret ).

Most of all, I hate the ego that sony is permeating these days. The rootkit fiasco, constantly trying to control the media ( Mem sticks, Mini disc, etc... ). The selling of inferior products at an higher price tag. You name it. The sony of today has become such an egotistical bitch I want to see it taken down a notch. Yet, perhaps the part that pisses me off the most is how they manage to sell products on hype. It doesnt piss me off at so much at sony, then it does at Joe Sixpack ( i dont care about fanboys, there all a bunch of tools ).

So, in the long run, I want to see Sony lose or at best tie the console war this round, yet still remain a viable company so they can learn from there mistakes. Sadly, I dont see that happening. Its either win or lose.


Oh... and one small bit of trivia. Sony has itself to blame for the xbox existing. Go back a few years and look at press releases from Sony pre - ps2 launch. All the talk about being a super computer for your home and not needing a PC. Stupid stupid shit to say, especially with people like BillG out in the world. Point blank, MS HAD to enter the market, as Sony could have actually suplanted the PC in many households had their hype been true. ( Still could... the difference between a game console and a pc these days to the average user, is frankly minimal ).

Edit: Cant type for shit tonight :( Anywhere you see there, substitute their. Im just too damned lazy to actually fix my 45 typos.

[fivestarr]

EDIT: One thing I forgot to mention, but it impacts all of sonys numbers for the positive is Yen valuation. With the US dollar tanking, strong foreign currencies all ride an upswing ( Yen, CDN $, GBP, Euro ). Sony operating in Yen, but selling in USD is a huge boost to them ( and part of the reason for huge gains by Sony Financial ). If the USD comes on strong, it will hurt Sony more, but if it continues to fall ( god I hope it stops soon... ), it will be a boon for sony. This is true of all non US companies that sell to the states.

Wrong way. A falling US dollar is terrible for Japanese companies receiving revenues in US dollars. A Japanese company operating in Japan but selling in the US pays its costs in Yen, which is rising, and receive revenues in US dollars, which is falling. So that means that their margins are shrinking because revenues are falling at the same time as costs are rising = bad.
In any event, with the Fed raising interest rates off historical lows, against countries with higher relative interests rates which are remaining on hold, the USD should rise going forward, with the Yen falling. So yeah in the end currency movement will probably be positive for Sony (to the extent that it sells in USD and pays costs in Yen).

[Dracula-X]

Here we go again.

Sony isn't going anywhere anytime soon. They can afford to hemorrhage money long enough to recoup PS3 R&D investments.

And someone ban Red Cloak already, this has long since gotten tiresome.

[Serapth]

Wrong way. A falling US dollar is terrible for Japanese companies receiving revenues in US dollars. A Japanese company operating in Japan but selling in the US pays its costs in Yen, which is rising, and receive revenues in US dollars, which is falling. So that means that their margins are shrinking because revenues are falling at the same time as costs are rising = bad.
In any event, with the Fed raising interest rates off historical lows, against countries with higher relative interests rates which are remaining on hold, the USD should rise going forward, with the Yen falling. So yeah in the end currency movement will probably be positive for Sony (to the extent that it sells in USD and pays costs in Yen).

Yeah... oops, my bad. Flip what I said, or go with what fivestarr said :)

[Serapth]

Here we go again.

Sony isn't going anywhere anytime soon. They can afford to hemorrhage money long enough to recoup PS3 R&D investments.

And someone ban Red Cloak already, this has long since gotten tiresome.

See... thats where you are wrong. They arent in a position to hemorrage money. Simply put, if sony took the 4 billion lose MS supposedly took last generation, it would come pretty close to making them cash negative.

Sony has about a 1 1/2 - 2 year window for the PS3 business to become cash positive, otherwise they are SOL.

[agentgray]

I can think of another company that was big and flopped in the games business.

It is all about the bottom line and if it doesn't cut it, the PS3 will get dropped. (GASP!)

[Exodus]

I agree, I see no reason to get a ps3, I survived without a ps2, and you know what, it doesn't hurt at all. If the ps3 retails higher than the 360, they are soooooooooooo tanking.
As for the entire 'virus' lawsuits. This had to happen, let Sony be an example to all the other companies of what you just DO NOT FUCKING DO.

[DaXIthR]

Didn't 'some analysts' just predict that Sony was going to clean up the upcoming console war with the PS3?

I thought so.

[mister_slim]

Online convergence into your living room? Nope, that's the 360.
How? For most people, a HDTV, a PS3 with bluetooth keyboard/mouse, and a hard drive with Open Office and Firefox and you don't need the 360 or the horribly insecure and pain-in-the-ass Windows PC. Maybe the BMG DRM is Sony demonstrating the weakness of the Windows platform? /paranoid spectulating.

To be blunt, most of what MS makes money in is approaching commodity software. Their ability to add value to office is increasingly limited, and they can't switch over to the 360 because their profits all come from the PC.
Wrong way. A falling US dollar is terrible for Japanese companies receiving revenues in US dollars. A Japanese company operating in Japan but selling in the US pays its costs in Yen, which is rising, and receive revenues in US dollars, which is falling. So that means that their margins are shrinking because revenues are falling at the same time as costs are rising = bad.
In any event, with the Fed raising interest rates off historical lows, against countries with higher relative interests rates which are remaining on hold, the USD should rise going forward, with the Yen falling. So yeah in the end currency movement will probably be positive for Sony (to the extent that it sells in USD and pays costs in Yen).
Correct. This was also why Nintendo had a money-losing quarter a few years back.

[Exodus]

How? For most people, a HDTV, a XBOX360 with bluetooth keyboard/mouse, and a hard drive with office and Opera(firefox? please... you speak of insecurities then you pull out firefox? lol) and you don't need a PS3 that does the same things that a pc does, oh wait, you don't even need a pc.. or is it maybe we should just use our PC to do these things and maybe use our consoles as the entertainment systems they are? God forbid that!

[Schnoogs]

Saying that a few lawsuits and blunders and crappy movies will put Sony out of business is ridiculous. Sorta like Microsoft shipping a few crappy games. These things are MINOR issues to corporations of that size. Microsoft's bread & butter revenue streams are Office and Windows. Sony's profit comes from either direct hardware revenue (TVs, etc) or indirect (Playstation sold at a loss to generate game revenue).

Stupid article.

And you got your masters in business from where?

[Dracula-X]

See... thats where you are wrong. They arent in a position to hemorrage money. Simply put, if sony took the 4 billion lose MS supposedly took last generation, it would come pretty close to making them cash negative.

Sony has about a 1 1/2 - 2 year window for the PS3 business to become cash positive, otherwise they are SOL.
If you're assuming 0 growth, sure. If you're assuming an electronics product line that has completely stopped dead. And no more movies, no more music, at least none that profit any (also assuming Spidey3 will tank, but it has Venom/Sandman so I'd have to guess it will fare well enough on that alone), and assuming finally they aren't able to secure loans if they truly get in dire straits.

I think it's far, far too early to suspect they're in any danger of going the route of Sega, at least I don't see Kutaragi trying to bail Sony out with $730 million of his own money like Okawa did for Sega. And it's to be expected they're going to lose money for quite a while yet when things start rolling with the PS3 as well (but expect another post 2 months into the PS3 release: OMG SONY IS TEH DEAD NO PROFITS YET ROFLCOPTER). That's business. We have to see how the next few years pan out under Stringer and if he's actually making a difference and helping the flailing divisions to come around. Until then it's all a FUD campaign.

[Serapth]

If you're assuming 0 growth, sure. If you're assuming an electronics product line that has completely stopped dead. And no more movies, no more music, at least none that profit any (also assuming Spidey3 will tank, but it has Venom/Sandman so I'd have to guess it will fare well enough on that alone), and assuming finally they aren't able to secure loans if they truly get in dire straits.

I think it's far, far too early to suspect they're in any danger of going the route of Sega, at least I don't see Kutaragi trying to bail Sony out with $730 million of his own money like Okawa did for Sega. And it's to be expected they're going to lose money for quite a while yet when things start rolling with the PS3 as well (but expect another post 2 months into the PS3 release: OMG SONY IS TEH DEAD NO PROFITS YET ROFLCOPTER). That's business. We have to see how the next few years pan out under Stringer and if he's actually making a difference and helping the flailing divisions to come around. Until then it's all a FUD campaign.

Thats the problem though... Sony has been getting buy on their gaming division. Their other divisions arent making money, so frankly they cant float a loss for an infinite amount of time(like microsoft frankly can..). If the PS3 does get good buyin in the first few years and if the rumours are true that they will sell it at a loss, Sony is in trouble. If all the rest of Sony was firing on all cyclinders then yeah, they could float the PS division until it hits profitable status, but frankly, the rest of sony is doing its best impression of Paulie Shore. Frankly, they are sucking arse.

If the PS3 tanks, so does sony.

Im not saying it will kill them, thats the great thing about Zaibatsu(sp?)... the will keep each other alive... Japan wont let sony die, they will fund a saviour loan. Regardless, if it comes to that, sony will become what Sega is now.

[mister_slim]

How? For most people, a HDTV, a XBOX360 with bluetooth keyboard/mouse, and a hard drive with office and Opera(firefox? please... you speak of insecurities then you pull out firefox? lol) and you don't need a PS3 that does the same things that a pc does, oh wait, you don't even need a pc.. or is it maybe we should just use our PC to do these things and maybe use our consoles as the entertainment systems they are? God forbid that!
Maybe you should think about what you are saying?

[rein]

Thats the problem though... Sony has been getting buy on their gaming division. Their other divisions arent making money, so frankly they cant float a loss for an infinite amount of time(like microsoft frankly can..)

Sony Financial ( good, who knew this existed... apparantly Sony sells insurance... ) mad a cubic assload of money apparantly. A net gain of 354 mil. Guess Japans insurance is just a crooked as ours


Wait.... ..I liked your original post but you are contradicting one of your points in it.

Why do people assume that MS can float an infinite loss? Especially when they point to the gaming division? MS has investors and stock holders and there is absolutely no way they will want to take a loss into a 3rd generation.

[Paltry]

http://www.evilavatar.com/forums/showthread.php?t=7003

hrm?

[Red Cloak]

"this root kit business all point to future of Sony as a self sufficient media machine. The Playstation it’s self could play a huge role in this machine, essentially it would be the place where it all comes together. At first glance this may seem horrible but it could be very positive for gamers."

That was intentionally funny? I love parody threads.

[bobbler]

Technology Pundits changed the title of the article...

Misleading headlines abound.

[Twigz'N'Berries]

Sony is fine for now.

1) They will have to pay a tidy some for the rootkit, but it will be dragged out over a lengthy period of time. It certainly will not bankrupt them.

2) THE PS2 last year made up 1/3 of its overall profits. I haven't a clue as to what percentage it will be this year. But with success of the PSP, Sony's gaming entertainment business is fine for now. Sony has, in a sense, diversified their videogame income by entering the handheld division. The PSP has seen boosts in sales of mem sticks and Sony brand movies (UMDs like Spiderman 2).

3) The PS3 will be a success because Sony is a master of media hype. Due to the impressive network of media outlets Sony owns, there will be commercials all over the place. You won't be able to look around w/out seeing an PS3 commercial in a movie (pre-movie jibberish), on the radio or concerts and in any gaming magazine. Having nearly 100 million units sold, somewhat guarantees you a large install base for the PS3. Those customers are going to want the option of playing their old games...not to mention taking advantage of all of the cross compnay promos Sony will hit them with (ex: Buy a PS3 and get 2 tickets to the next Spiderman. Or, get 10% off a Sony brand HDTV w/ the purchase of a PS3). Sony has far too much riding on the PS3 to launch it at a $600 price point where its failure would be guaranteed. They will subsidize the Blu-Ray player and the Cell chip by making the PS3 affordable. In turn, they make the BR the new accepted standard and they make a crapload off of the BR royalties. They get further exposure for the Cell chip and they can sell even more memory sticks. I just can't forsee the PS3 failing in the US like Xbox did in Japan. However, I am curious as to when the PS3 launches. If they launch too late in the US, the PS3 growth rate may be slowed by a larger 360 install base. I personally hope it slips to 2007.

As much as MS lovers may hope for Sony's demise, it just won't happen. I do admit, that I see little hope for their TV/Personal electronics line. There TVs have a bad rep for being overpriced and prone to giving out. Their competition is making TVs cheaper and in many cases better. Their plasma business is dying and their LCD business has risen, but not at the rate of the other major manufacturers. Sony MP3 players aren't selling against the IPOD or cheaper rivals and their music business is suffering because the industry is suffering.

But I personally believe we will see a PS4 and a PS5.

[AspectVoid]

Sony is fine for now.

3) The PS3 will be a success because Sony is a master of media hype. Due to the impressive network of media outlets Sony owns, there will be commercials all over the place. You won't be able to look around w/out seeing an PS3 commercial in a movie (pre-movie jibberish), on the radio or concerts and in any gaming magazine.


Hopefully their comercials will be better then the XB360's comercials. I saw one last night. It spent a minute showing a bunch of people playing jump rope, then said "Jump In" in white letters, and finally displayed the XB360 logo for about five seconds. It made me want to jump rope, but after it, I didn't care at all about the XB360.


As much as MS lovers may hope for Sony's demise, it just won't happen. I do admit, that I see little hope for their TV/Personal electronics line. There TVs have a bad rep for being overpriced and prone to giving out.

Actually, only Sony's low end ones are. That's the real problem with the company right now. Their low-end stuff isn't all that solid, but their high end is great. The problem is that too few people buy the high end, so they don't make the money back and bad word spreads around because of their low end.

[Thenetcase]

I don't think Sony will go bankrupt.. they have way more going for them than their video game entertainment division.

However.. if they do go bankrupt.....

I will take blackroses to their grave every month and water them with my piss.

-tNC-

[Captain Awesome]

This has been the case since SOE starting feeling the hit to their pockets with their MMO's not being as big as they wanted them too. Blizzard put that nail in the coffin with WOW. SOE let go of alot of people not to long ago.

And I know Sony isnt MS rich either. So alot of this new circus lawsuit stuff they created will hurt them. The PS3's production won't be cheap either. Sony was feelign this last year in their electronics dept. and they even tried to blame the PS2 for its financial woes. Bit of a childish thing no? (lol)

[Serapth]

Wait.... ..I liked your original post but you are contradicting one of your points in it.

Why do people assume that MS can float an infinite loss? Especially when they point to the gaming division? MS has investors and stock holders and there is absolutely no way they will want to take a loss into a 3rd generation.


Actually no, I didnt contradict my origonal post. I say *has* been getting by on their PS unit, which in previous years was true. This year, even their PS unit sucked ( my guess is the PSP just killed their profits this year ). But, look at previous years numbers from Sony and the playstation has been their biggest income.

As to MS floating an infinite loss... well, no not inflinite, but damned close. Put it this way, they have greater then 10X the warchest of Sony, and it grows by more then 10 billion a year. With those kids of number, trust me, they can float a loss for a while. Also, keep in mind, even with Xbox losing 4 billion, MS as a company still made billions.

I had heard a number in the past, either Money, or in WSJ, that Microsoft could make ZERO revenue at current operating costs and stay alive for 18 years. Thats unheard of.

[omnithrope]

The problem with movies like like Stealth/Zorro/Zathura is that everybody expects a mind-blowing, ego-wrestling, uber "Theah-TAH" picture along the lines of Schindler's List or Private Ryan anymore...

Sit the fuck down, suck your pop through the straw and munch your fucking popcorn and just enjoy the god damn fucking film. Not everything NEEDS to be Citizen Fucking Kane in stature.

Yes, bad day for me, but I'm getting sick of all the pissing and moaning about how movies aren't living up to what they should be anymore... YES, there are crap films a-plenty (see any Uwe Boll flick), but god fucking damn people, take a fucking break and enjoy a couple.

Have you thought that maybe, just maybe, we don't really want "Theah-TAH," but just expect movies won't be pieces of shit like Zorro?

There's a huge difference between "mediocre" and these awful films.

If you think these are adequate, might I suggest you raise your bar a bit?

[MajSheppard]

I want this to happen so fucking bad. I want this to happen so they have to sell back all the American movie studios that they screwed up. Many of my favorite movie studios have been producing notably worse movies since they moved in. I also hated the idea of having to give sony money if I wanted to buy anything from a season of stargate, to a 007 flick. Please God, Ala, Budda, whomever, let them have to sell off ever thing and force them back to at least where they started. Making overpriced electronics and backing it up with piss poor customer satisfaction by never standing behind ones product.

[omnithrope]

Sony's not going anywhere. No matter how poorly they're doing, they're still a Japanese company.

What does this even mean?

[Magnanimous Gnome]

Quite frankly I think Sony has been a pretty poor company for quite some time. This DRM stuff is crap and I want to see them punished for it.

However, I also don't want to see them go completely out of business. Having MS basically control the console market? No thanks. The day that happens is the day I just give up all hope of videogames ever evolving past the rut they are stuck in now. There's hope of Nintendo being their counterpoint just as Apple has been in the computer market, but a market 95% controlled by one big corporation is nothing but bad news for consumers.

[reimomo]

What does this even mean?

It means that Japanese mega-corps don't dissapear when they go bankrupt. Same as US airlines.

[Paltry]

youre a cock sucker red cloak

[rpdillon]

The PS3 had a very long development cycle and it was very expensive. It is probably the most ambitious home console developed in terms of features based on new technology. It is a platform that is designed to have a long lifecycle, and built for the future, not the present.

Specifically, this means they are paying through the nose now for technologies that will be important in 5 years. They are also including technlogies that are non-standard, like Cell and Blu-Ray. These are truly "next gen" technologies. Whether they turn out to be widely adopted remains to be seen. This is a sharp contrast compared to Microsoft who has chosen to use cheaper, mainstream, proven technologies. The tradeoff will obviously only become apparent in a few years when we evaluate the next next-gen consoles.

It is a given that top-end consoles will be sold at a loss at launch. This is true of the PS2, Xbox, Xbox 360 and PS3.

Comparisons between the PS3 and 360 are inevitable, but in some way are not appropriate yet. We are a scant 10 days from the 360's launch in the US and we know a lot about what it stands for, including opening day game line ups. The PS3 is at least 6 months from release *in Japan* and likely a year from release in the US. Think about what we knew about the 360 a year ago, and you'll begin to see my point.

This is not a sprint. This is a marathon. Right now, Sony is paying dearly in hopes that their investment will pay off in the future. This is risky, but it is not unreasonable. The public has indicated time after time that they generally do not want to upgrade as often as companies would like. Of all the companies releasing consoles, I think Sony is closest to what consumers can afford in the long term. I don't know if the consumers know this, and that will determine their success.

Specifically, everyone likes to pit the DS against the PSP. The DS will be dead and buried in it's current incarnation before the PSP makes money. Nintendo has a fundamentally different approach that is far more incremental. Just look at the Gameboy Advance, Gameboy Advance SP, DS and Gameboy Advance SP (with backlight!) to see what I mean. They have already indicated that new versions of the DS will be coming out, likely wiping "version 1.0" from the shelves.

The same is true with Microsoft, but in a different way. XBox was released almost a year after PS2, and XBox 360 will be released about a year before PS3. In a market that turns over every 4 years, that's 50% more time per generation. My point simply is that Sony is using a different strategy in these consoles that its competitors, and that strategy naturally leads to low return at this point in the cycle.

I'm not saying they will be successful, but I think the battle will truly begin sometime in mid-2007 after all the consoles are mature and we begin to see what they are made of in terms of game line-up, features, and planned additions. This is particualrly true because most opening day games will hardly make use of the massively parallel architectures that both the 360 and the PS3 sport. When PS2 came out, it simply wasn't possible to produce something like Burnout 3, Killzone or Shaow of the Collossus. We have to let the platform mature before we really understand what it offers. All of the PS3/XBox 360/Revolution arguments up to this point are fun and interesting, but because of such disperate launch dates, I will reserve judgement until they are all released. A year is a long time in the world of computers.

Just my .02.

[mister_slim]

What does this even mean?
Japanese still has a bit of a planned economy thing going on. If one of their major companies starts going down the government and the major banks will step in to help them through it.

[51|RandoM]

Guys, this isn't an overnight sensation here, Sony as an entity has been tanking for YEARS. They've been using the ps1/ps2 revenues to float the rest of the company, and now facing the oft hard times of transition to a new console.

You have to remember that Sony is a multi-division company, not just ps2-central. Diversification is great, you can shore up a failing unit with successes in your other units. Unfortunately, Sony has been failing everywhere except their financial business in Japan and their console. Even ps2 stuff has been going downhill, although is still a profit center.

Their are two core problems they face, one being the continued erosion of the Sony brand in consumer electronics. They used to be the king of many of those product lines, tv's, portable music, etc. Wega used to be e-peen material. The other problem, imho, is the huge investment they've put into motion pictures. It is like the videogame industry, just with bigger budgets. If you don't make a blockbluster, you lose your shirt, and sometimes even if it is a blockbuster, you still lose your shirt.

Regain the edge in consumer electronics, shed the movie studio gambling machine, and try to stick it out. I think they've completely burnt themselves in consumer electronics, they're going to have to almost completely rebuild their image, and do it with solid products, not slick marketing. On top of that, they're dealing with an increasingly well-informed consumer, a consumer who isn't locked in by brand loyalty like we used to be. Nowadays, it doesn't matter who makes it, we read the reviews, compare the specs, and choose the product. Brand loyalty might help where the contenders are neck and neck, but it isn't going to sell crap for you anymore---which is what Sony has been doing with it for at least the past 3 years.

One last thought, the console sector isn't going to keep floating them. The ps2 generation was a fluke, where they had no real contender. Microsoft will give them a very strong fight in America and Europe this generation, and I expect we'll start seeing pricing that reflects the increased competition.

Who has more money to burn? :-)

[rein]

Actually no, I didnt contradict my origonal post. I say *has* been getting by on their PS unit, which in previous years was true. This year, even their PS unit sucked ( my guess is the PSP just killed their profits this year ). But, look at previous years numbers from Sony and the playstation has been their biggest income.

As to MS floating an infinite loss... well, no not inflinite, but damned close. Put it this way, they have greater then 10X the warchest of Sony, and it grows by more then 10 billion a year. With those kids of number, trust me, they can float a loss for a while. Also, keep in mind, even with Xbox losing 4 billion, MS as a company still made billions.

I had heard a number in the past, either Money, or in WSJ, that Microsoft could make ZERO revenue at current operating costs and stay alive for 18 years. Thats unheard of.

You didn't add the quote I was referring to when I said you contradicted yourself.

Their other divisions arent making money

vs your original post

Sony Financial ( good, who knew this existed... apparantly Sony sells insurance... ) mad a cubic assload of money

Maybe I am not getting it but in one post you say their financial services division makes an assload of money and then in the other you say that they have no other divisions besides gaming that are making money. That is what I was talking about.

As far as MS floating a loss indefinitely to support their gaming division. Sure they could do it but they never ever will. Period. MS will not bleed money indefinitely so we can play games.

[Serapth]

You didn't add the quote I was referring to when I said you contradicted yourself.


No, as they were two seperate posts :) Sony has traditionally ( the last 4 or 5 years ) floated the company on the success of the playstation. This year was an exception ( in that the PS line sucked too ). I didnt feel a need to pour salt into the wound. This year, nothing floated Sony, they frankly just had a bad year.


Maybe I am not getting it but in one post you say their financial services division makes an assload of money and then in the other you say that they have no other divisions besides gaming that are making money. That is what I was talking about.

I dont believe I said no other divisions made money, what I said is the gaming division has been floating the company ( with this year as an exception). Look into their history and you will see this is true. Yet your right, I said Sony Financial made an assload of money, but this was mostly for two reasons. First, I wanted to say assload... really, can you blame me... its just fun to say. Second, and I justified this in an earlier posting... sony financial was successful just as much from the currency market ( AKA, the US dollar doing a swan dive ) and from some semi shady dealings ( pension fund being sold to the Japanese government ) as it was from anything else. Like I said earlier, that that 500 mil out of the picture and sony was doing pretty shitty. Again, like I said earlier, I was frankly quite shocked that sony had a financial division in the first place.


As far as MS floating a loss indefinitely to support their gaming division. Sure they could do it but they never ever will. Period. MS will not bleed money indefinitely so we can play games.

Oh I agree 100%. I think Xbox360 has to break even this generation at the least, or MS will probrably get out of the market. That said, I was responding to an origional comment saying MS couldnt afford the loses, which frankly is laughable. MS could lose money on the Xbox for another decade without serious impact to the company ( put it this way... the 4 bil they are said to have lost on the Xbox is jack shit... 4 billion across 4 years... hell, I think thats about what they paid for Visio a few years back... its pocket change to a company like Microsoft.

Compare apples to apples... Sonys financial state compared to microsofts is like comparing a crop duster to an F16. Sure they both fly, but....

[The Iron Weasel]

Theres no fucking way that MS gives up if they loose out this generation. They'll push, and push, till they're number one.

[blackzc]

The PS3 had a very long development cycle and it was very expensive. It is probably the most ambitious home console developed in terms of features based on new technology. It is a platform that is designed to have a long lifecycle, and built for the future, not the present.
.

Features based on (newish) technology ill agree, but the NEO GEO was a more powerful system all things being equal.

[Heretic Machine]

It is a given that top-end consoles will be sold at a loss at launch. This is true of the PS2, Xbox, Xbox 360 and PS3.

But... the 360 is sold at a profit. They don't take a loss <.<

[Serapth]

But... the 360 is sold at a profit. They don't take a loss <.<

Actually I think I read that initially it would be sold at a very small loss and expect to be profitable within a year. Regardless, even if thats the case a year is nothing to recoup loses.

[Nath5000]

All of this financial situation jabber aside, completely from a consumer perspective, I think Sony is still a mainstream name but is definetly starting to slide. Ten years ago, you could walk into a "The Sony Store" and look at their best-in-market TV's, walkmans and Playstation was the undisputed leader. Sony pictures and sonys music division hadn't been hit by piracy and file sharing and the status of making money on consumer films and music was probably great. Sony's products were still fairly expensive, but as consumers many recognized and respected the brand and the quality it had to offer.

Fast forward 10 or so years later. Sony's music and movies had to go through the file-sharing/broadband/piracy phase which it's still far from clear of, expecially considering the mess they got into with that rootkit "virus" stuff to try to prevent piracy. Sony's once high horse champion, Playstation, is really lacking compared to the competition (unless they have an exclusive game that MS/nintendo doesnt). Sony's philosophy for the PS2 seemed to be a "We're Sony Playstation, we're the best. Making games for our platform is complicated, but heck you HAVE to adapt if you want to hop on our train to sucess". Now Microsoft is in the competitive picture throwing better services (like xbox live) and heck even better product websites, and giving consumers what they want, and even developers. (compare xbox.com even before the update to playstation's site, doesnt compare in my opinion.). Either way, sony as it stands is still doing great with games, but their flaws are starting to show.
Throw in the xbox 360, potentially half of a year before the ps3. The 360 could be exactly what consumers want, could be cheaper than ps3, the product features and services could be better than ps3. The ps3 in a sense has to 1)live up to the competition on the online/service/ease for developers/price for consumers and prove to consumers that they should buy the product and prove that it's actually more worthwhile than something that is already great that came out in nov 2005. If sony's psp (which I own) seemed like a step into that competitive direction (which it doesnt IMO) then I would half believe that sony could suceed against the 360. The psp seems more like a, "heres our new fancy handheld, make games for it", as opposed to a "heres a handheld, this is why you should buy it, look at all of these unique consumer benefits (other than graphics) that show the evolution of the playstation platform as a whole".
If you can, imagine that the xbox had the exact same hardware power as the PS2, in that case, microsoft would still have the edge on services and the desire to develop developer/publisher relationships to satisfy the consumer.

As a consumer, when I walk into the sony store now, I see walkmen that dont live up to Ipods, Playstations that will be old news for 6 months until a potentially super expensive PS3 comes out which may or may not even live up to the competition in anything but specs. A psp that forces you to buy overpriced memory sticks, forcing me personally to rebuy memory and doesnt give me the option to share memory between my cameras or PDA unless its a sony product as well (such as secure digital). Sony has too much proprietary crap. I want to use a SD card in my psp, not a memory stick, or at least have the option, but sony doesnt make a universal port like everyone else because they are too cool for school. Im not going to buy a movie on a UMD for in some cases more money to play it on a handheld either...

When it comes to tvs, their tube tvs im assuming are still the best, but theyre expensive, and bulky and somewhat old news (considering they arent progressive displays or pixel for pixel displaying the signal in most if not all cases). DLP plasma LCOS HDTV are all better quality with other companies like samsung pioneer toshiba etc. As far as sony movies go, spiderman was awesome, other than that I really dont know much about their movies. Havent seen the new zorro yet. I hope its good bc I loved the original. :)

The thing that bugs me, as an owner of a playstation 2, psp xbox and gamecube, is that the quality of xbox live and the effort that microsoft seems to be putting into the xbox.com and xbox live and platform seems to be much harder than what sony is putting into playstation. I was half expecting PSP to reflect a new competitive outlook, instead im stuck with a small expensive handheld with the same crappy online service quality, proprietary junk expensive memory format, and Oh WOW (sarcasm) the option to rebuy all of my movies for the same/more/less of the price that wont even work on a tv!... The psp is really just the old school playstation philosophy crammed into a handheld, and the lack of good games until GTA forced me to replay wipeout and ridge racer, games that I'd probably have never bought if there were better games available.

I really used to love sony. I have a sony PC, a few sony tv's in the house. A sony surround sound system receiver, playstation 2, psp and an old sony PDA. Looking into the future, i really want to hop off the sony bandwagon as a consumer. Brand loyalty is a thing of the past as someone mentioned above.

I dont care if sony is doing really crappy financially, the real reason I think is that they arent competitive enough regarding what consumers want. They think they can just sit on their brand name and expect money to roll in.
I think the PS3 could potentially kick the 360's ass, but its going to take more than just beefier specs. Sony better be working their ass of by making a better website, better online service, better developer/publisher relationships etc. The psp doesnt reflect that desire... I just hope they catch on. It'd suck as a consumer to see a technically superior device flop because the people in charge dont understand more than just technical specs when looking at competition.

Ah well thats my rant for the year, been a long ass time since I've posted on EA.

[Heretic Machine]

Actually I think I read that initially it would be sold at a very small loss and expect to be profitable within a year. Regardless, even if thats the case a year is nothing to recoup loses.

From what I understand, they make $50 profit with every console sold. Don't know if this refers to the bundle or the core system.

[Twigz'N'Berries]

From what I understand, they make $50 profit with every console sold. Don't know if this refers to the bundle or the core system.Any links to this info...i can't find it. Not being a smart ass, i just want to read the article/info.

[mister_slim]

Any links to this info...i can't find it. Not being a smart ass, i just want to read the article/info.
Probably based on the Merril Lynch estimates of a $340 manufacturing cost. Next-gen.biz has coverage.